OAKLAND — Faced with rapidly diminishing demand for coal in the U.S., Utah has approved a $53 million investment in an Oakland shipping terminal nearing construction with the hopes of exporting it to less environmentally stringent markets overseas.

The move has enraged environmental groups, and city leaders are also raising concerns.

Earlier this month, Utah’s Community Impact Fund Board endorsed the investment in Oakland’s Terminal Logistics Solutions on behalf of four counties, three of which produce all the coal in the state.

Terminal Logistics will start building the $250 million Oakland Bulk and Oversized Terminal at the Oakland Global Trade & Logistics Center later this year and hopes to finish the 35-acre project in 2017.

“We know Oakland doesn’t want coal coming through the city,” said Jess Dervin-Ackerman, conservation manager for the San Francisco Bay Chapter of the Sierra Club. “We’re ramping down the use of coal in the U.S. because we recognize it’s a horrible source of pollution, and it contributes to climate change. This is city-owned land, and to us, it’s the responsibility of the city to not let coal be exported.”

But Phil Tagami, the city-designated developer of the project, said his seven years of approvals and environmental entitlements secured to develop the former Oakland Army Base allow him to lease the space to a private company that can export just about anything except “nuclear waste, illegal immigrants, weapons and drugs.”

“It’s not for me to determine,” Tagami said. “We are entitled to have a bulk commodities terminal, and beyond that it’s up to the market to determine what we export.”

Tagami said environmentalists opposed to coal exports are focusing on the wrong thing.

“If people took a hard look at the household products they have under their sinks, they would freak out if they saw things like ammonia and chlorine in 55-gallon drums or in a rail tank car,” he said.

Oakland Mayor Libby Schaaf said she opposed the export of coal from Oakland. While on the City Council last May, she voted in favor of a resolution opposing the transportation of coal and crude oil through the city.

“Obviously, we’re going to work with our business partners to try and reach a mutually acceptable way of moving forward,” Schaaf said. “This is a very important project for the city of Oakland, and this policy resolution is important also.”

Jeremy Nichols, climate and energy program director for WildEarth Guardians, which is fighting expansion of coal mining rights on federal land in Utah, called the state’s investment in the Oakland export terminal a “misguided last-ditch effort to keep their industry alive.”

“If we are serious about cutting carbon emissions, we have to do more than cap carbon at the smokestack,” Nichols said. “We can’t just ship it to someone else’s backyard. That doesn’t solve our climate problem. You factor in the carbon impact of shipping it by rail and then boating it oversees, and that’s extremely energy intensive. It’s the last thing we should be doing.”

In return for Utah’s investment in Oakland, Utah will get a guarantee that it can send a certain amount of goods annually through the bulk shipping terminal. In addition to coal, Utah could also use it to export potash, limestone, salt and hay cubes.

Utah is the country’s 14th-largest coal producer in the United States with about 16 million tons each year. Coal mines in Utah and across the country are facing a bleak future if they don’t find international markets, as domestic power plants switch over to natural gas or close because of upcoming federal regulations.

“We’re seeing power plants switching over to natural gas or closing because pollution control for coal-fired plants is too expensive,” said Dave Tabet, energy and program manager for the Utah Geological Survey. “It was always a hope there would be a market in Asia because there is tremendous demand over there.”

Of the 16 million tons of coal produced in Utah each year, only about 1 million tons is currently exported internationally, Tabet said. Those exports currently go through the Port of Stockton, a privately owned port in Richmond called Levin-Richmond Terminal Corporation and through the Port of Long Beach, he said.

The Levin-Richmond Terminal in Richmond currently exports 1.2 million tons of coal a year from Colorado and Utah, a spokeswoman said.

In Utah, the Community Impact Fund Board, under the state’s Department of Housing and Community Development, approved the investment with no written reports or studies, just the oral testimony of officials in the four counties requesting the money. County representatives told the board the money needed to be approved quickly with a June deadline to sign agreements with Terminal Logistics Solutions.

Jerry Bridges, president of Terminal Logistics Solutions, said the deal with Utah is still being negotiated. He said any product moved into the facility will be covered, so if it’s coal there won’t be coal dust blowing around from Utah to Oakland in open railroad cars.

“None of it will ever see the light of day,” Bridges said. “I’m not in the business of defending coal, I’m just saying if coal is a commodity that we allow through this facility, it’s the cleanest coal available in the world marketplace. We want to make this terminal the most efficient, the most environmentally friendly one there is, so we don’t get sideways with the environmental community. We want to make money, but we want to minimize the impacts on the environment.”